Sectoral Loans and Bank Performance in Nigeria (Published)
The study examined the effect of Sectoral loans on commercial banks performance in Nigeria using time series spanned data over a period, 1990-2018. Secondary data were sourced from the central bank of Nigeria statistical bulletin 2018. Hypotheses were formulated and tested using Augmented Dickey-Fuller, co-integration, and the error correction mechanism tests. Specifically, the sectors looked into in this study are Agriculture/forestry, manufacturing, and mining/Quary sector respectively, while interest rate was included as control variable. The result indicates that agriculture, manufacturing, and mining sectors have linear and insignificant effect on bank performance proxied by return on asset; while interest rate has negative effect on bank performance for the period under review. Furthermore, Johansen co-integration test result indicates the existence of four cointegrating long run relationship among variables selected in this study. It is proffered that Government should strengthen institutions that are charged with the responsibility of granting loans and advances to agriculture sector because of its associated benefit not only to the banks but the economy at large. The bank of industry (Boi) and the central bank of Nigeria should as a matter of urgency create enabling business environment for manufacturing companies to access cheap funds so as to enhance business growth and innovations. Interest rate for agriculture, manufacturing and mining sector should be reduced to a single digit so as to encourage these sectors to grow.
Keywords: Agricultural, Commercial Bank, Manufacturing, Mining, sectoral loans